Business Associations Cases
AGENCY
– Agency is the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other to do so
Gorton v. Doty
§ Facts: FB coach used car from woman to take players to out of town game. Resulted in accident, coach died, players injured. Parent sues car owner.
§ Issue: Whether coach was acting as agent of car owner?
§ Holding: Yes
§ Rationale: Coach met condition precedent by him only driving. He agreed to drive car if only he drove it/ She said he could use car if only he drove.
§ Notes: If he was loaned the car, he wouldn’t be responsible.
1) k not needed, need not be business matter, no compensation needed
Jensen Farms v. Cargill
§ Facts: Cargill started working with Warren Grain, they then defaulted. Jensen lost $ on grain. W had limitations set by Cargill.
§ Issue Whether Cargill acted as an agent for Warren Grain?
§ Holding: Yes.
§ Rationale: C had control, financing = Agency.
§ 9 factors
o Recommendations
o Right of first refusal
o inability to mortgage, stock/dividends
o Right to audits and checks
o Criticism about finances, salaries
o needed strong guidance
o forms had C name
o Financing
o Power to end financing/lending
§ Notes
LIABILITY 3rd PARTIES K – AUTHORITY
Mill Street Church of Christ v. Hogan (Authority)
§ Facts: Bill Hogan hired to paint church. Brought on brother to help. Bro fell and broke his leg.
§ Issue Whether Bill had authority to hire brother to help paint church?
§ Holding: Yes, both implied and apparent authority.
§ Rationale:
o Implied = Authority P intended A to wield to finish job.
o Apparent = Authority Agent appears to hold from P è 3rd party reliance.
o Possessed implied = Had worked for church before, had hired bro before
o needed asst help
o Sam thought B had power to do so – relied on B’s representation.
o Paid!
§ Notes
o person alleging agency and authority has BOP
Lind v. Schenley Industries, Inc. (Apparent)
§ Facts: Lind was told by VP and Sales GM that he would get promotion and commission. Move
H had the inherent authority to purchase, then making P liable.
§ Holding: Yes
§ Rationale: Affirmed = Δ liable.
o Test = reasonable scope of business…yes!
o Humble over the door
o Dormant partner – 3rd party knew nothing of Δ’s
§ Notes
Botticello v. Stefanovicz (Ratification)
§ Facts: TIC – H &W negotiated with P for farm. Agreed for lease with option. Drafted by H’s atty, P & H signed, but not W.
§ Issue: Whether H acted as Wife’s agent and her actions = ratification?
§ Holding: No
§ Rationale: W always signed for herself.
o W didn’t intend to ratify…didn’t know all consequences
o merely observed and took rental payments
o knew there was agreement (lease) and took payments
§ Notes
o before receipt of payments can ratify, other requisites must be met first
o To ratify = intent + full knowledge of material consequences!
